I'm an expert in business growth and overcoming organizational obstacles to success and a public speaker at conferences and management meetings on how to grow your organization. I'm a workshop leader for companies wanting to find their next growth engine, an author of "Create Marketplace Disruption: How to Stay Ahead of the Competition" (Financial Times Press), a contributing editor for "International Journal of Innovation Science" and a leadership columnist for CIOMagazine and ComputerWorld. I am a former head of business development for Pepsico and Dupont, consultant with The Boston Consulting Group and am currently Managing Partner for Spark Partners. Harvard MBA. Hail from Chicago.

Buy Facebook Now - Catch a Lucky Break!

On May 18 Facebook went public with an opening price of $38/share. Now, after just 2 weeks, it’s more like $28.

Ouch – a 25%+ drop in such a short time makes nobody happy. Except buyers. If you are interested in capturing a high rate of return with little risk, this is your lucky break!

Smart investors buy on dips

The values of publicly traded companies change, often dramatically, based upon changes in performance and investor expectations about the future. Trying to profit off fast price changes is the world of traders – and the vast majority of them lose fortunes rather than create them. Knowing how to take advantage of whipsaw events, and invest in good companies when they are out of favor, is important to long-term wealth creation.

Investors make money by understanding product markets and the companies supplying them, then investing in companies that build upon trends to create revenue growth with high rates of return over several years. In the forgettable 1999 movie “Blast from the Past” (Brendan Fraser, Christopher Walken, Sissy Spacek) a family moves into its nuclear blast shelter in 1960 during a panic, and doesn’t come out for 35 years. Fortunately, the father had bought shares of AT&T and other companies aligned with 1960 trends, and the family discovers upon re-emergence it is quite wealthy.

Creating investment wealth means acting like this family, buying shares in companies building on trends so you can hold shares for years without much worry.

If ever there was a company aligned with trends, it is Facebook.

Facebook did not attract 900million users in 8 years by being lucky. Facebook is the ultimate information era company. Facebook is not a fad – any more than television or telephones were fads in 1960. Just like they provided fundamental new ways of acquiring and disseminating information Facebook is the newest, most efficient and effective way for connecting and communicating in 2012.

When television appeared the mass population said “why?” There was radio, which was cheap, and older users said TV reduced the use of imagination. And television was not originally available many hours per day. But it didn’t take long for CBS and its brethren to prove it could attract eyeballs, and soon Proctor & Gamble started paying for programming so it could promote its soaps (remember “soap operas?”) Soon other companies developed programs strictly so they could promote their products. The “Ted Mack Amateur Hour” was sponsored by Geritol, and viewers were reminded of that over and over for 30 minutes every week. Eventually the TV ad model changed, but the lesson is clear - when you can attract eyeballs it has value and there will be businesses creative enough to take advantage.

Now television watching is declining. Instead, people are spending more time on the internet – including via mobile devices. And the location attracting the most people, and by far for the most minutes per day, is Facebook. Facebook’s access to so many people, so often, creates an audience many businesses and non-profits want to tap.

Facebook has value beyond selling ads

Further, in the networked world Facebook not only has eyeballs, it delivers to those eyeballs some 9 million apps, and knows what everyone wants, where they come from and where they go next. Beyond the industrial-era business of selling ads (like Google,) Facebook’s information business has significant value for anyone trying to promote or sell a solution. Facebook is a repository of information about people, and their behavior, never before seen, understood or developed for use.

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Sorry, but I think that you are confusing two things. It´s true that online advertising is pretty undervalued(It´s bizarre to think that the NY Times and the Washington Post pays the costs of their online editions, that are read by valued customers from all over the world, with advertising in the print editions of their newspapers) while print and TV advertising are overvalued.

But, on the other hand, it´s very difficult to build a mot in the castle(To use Warren Buffet´s analogy) in tech business. It´s very difficult and expensive to build a broadcast network in national level like CBS(Murdoch took something like 14 years to effectively do that with Fox), but Facebook needed little money and infrastructure to become Facebook and Facebook can be surpassed by a company constructed inside a college dorm or a garage. Without its volatile base of users Facebook is nothing.

I usually agree with Adam’s views and commentary, but not on this one. Adam seems to think that just because users spend more time on Facebook, it is somehow more valuable or more potential than even Google itself. The statement that Facebook is somehow more in touch with new trends could have been said about Yahoo in 1999 and MySpace. Both sites were innovative at the time and had millions of users, and yet, they failed to capitalize on their user base, because users don’t use social media to CONSUME, they use it to keep in touch with friends and waste time (play games, etc) Facebook is nothing but a glorified email and chat /gaming system.. and i don’t see anyone implying that gmail, hotmail or yahoo mail are going to take over the world anytime soon. There is nothing innovative about Facebook, people use it because of hype and because “everyone” is there.

Nobody goes shopping on Facebook, that is what Google and Amazon are for. No wonder most advertisers are ditching Facebook as an marketing platform, because it produces NO RESULTS.

When Facebook fail to capitalize on their ads, they will go the way of Yahoo and MySpace.. a highly hyped platform, which will be eventually replace by the next fad.

Thanks for commenting Josh. Initially Yahoo was worth quite a lot. It was about the first to “monetize” the internet – charging advertisers for eyeballs. In the 1990s more home pages were Yahoo than anything else, and they made excellent money charging advertisers for that.

But, of course, the world changed. Google outsmarted them by realizing search could change the game, so they built the world’s best search engine and created Adwords and the rest is history. They grabbed the users, and the advertisers.

Advertisers do want to reach all those FB eyeballs. But most haven’t figured out how to do it well. They keep proposing old solutions for advertising that were based on one-way, non-social platforms/media. FB is telling them how to do promoted fan pages, etc. and soon enough they will learn. They will start to catch on to how recommendations are made, and how to link into recommendations, and users — and even games. It’s already started, and is bound to grow.

Facebook isn’t a retail site, but it has value as a referrer to retail. Also as a transaction processor between two parties – say two friends selling the other a used couch. FB is a leader in connecting people, and retailers as well as processors have value in supporting “connectors” – especially if it connects folks to them!

Sometimes it seems like folks think FB has no revenues. That is untrue – as 2011 saw some $4B in revenue. The open question is whether the revenue growth will be like Google was – or not!

Thank you Adam. It seems, that so far, social media companies has failed to fulfill its potential as a platform for business, because of the very nature of social media. Nobody wants to be bombarded by ads, or have their personal information sold, just to keep in touch with friends and family.

The two most successful internet companies, Google and amazon never started as social media platforms, but have integrated some media platform features on their products. Both companies’ success is due to the fact that their platform was based on business services, not social media.

Facebook’s potential as a business service platform is limited at best, and at the worse case scenario it could turn out like myspace. Remember, Yahoo never competed directly with google when it started its life as a company. Facebook has some formidable competitors like google and amazon, that are going to make sure facebook doesn’t encroach on their territory.

Adam, as I wrote in my trilogy, Facebook as Investment, Facebook’s management team shows serious signs of not understanding how to monetize its unique value. Moreover, investor expectations are wildly out of alignment with what the company can create in value and the management team is not guiding them. I agree with you that the company potentially has massive value (my pick is to guide mass customization), but not sure the management team can pull it off.

CSRollyson, it sounds like you are doubtful about all social media, not just FB. If so, we are at polar extremes. Social media makes life easier, just as search once was a big productivity breakthrough. I don’t see it going away, but rather becoming more popular, more used and generating multiple revenue sources for participating companies. Friend me on FB and check out the string of articles I posted this morning on how FB is implementing revenue streams offering exponential growth.

Thanks for commenting Omar NunyaBiz. I am sure the execs at Google have said countless times they wish they had done that 3 years ago. But now I doubt they could ever afford FB – especially as trends are going against Google and toward social media